Eighteen months after a group of investors bought a bankrupt IdleAire, the company will cease operations today after failing to find a buyer for the off-board idle-reduction technology provider.
The Knoxville, Tenn., company installed equipment at truckstops and other facilities that allowed trucks to receive heating, air conditioning and entertainment services without running their engines. It has been in discussions with interested suitors about the sale of the company, but failed to find a buyer, according to an announcement sent out late Thursday.
IdleAire Inc. is owned by six investment management companies who were working together on a sale of the company, after purchasing the bankrupt IdleAire Technologies in July 2008.
"The company had made great strides toward profitability in the midst of a very challenging operating environment," the company owners said in a statement. "We believe IdleAire had strong growth potential and was well positioned to capitalize on the recovering economy. We are very disappointed that the company is forced to cease operations at this juncture."
The move apparently came as a surprise to TravelCenters of America, which has the bulk of IdleAire's facilities at its TA and Petro truckstops. Spokesman Tom Liutkus explained that IdleAire is a tenant of TA's. "We have seen the signs at their locations to the effect that they have closed and we are endeavoring to reach IdleAire."
TROUBLED HISTORY
IdleAire launched in 2000. Environmental concerns loved it, and the company was very successful in getting government grants. But truckstops were slower to implement the system than initially targeted, and drivers had a love/hate relationship with the system. The company never made a profit.
Over the years, IdleAire repeatedly missed its stated goals regarding number of locations. For instance, in 2004, Tom Badgett, then-CIO, said the devices would be at 250 locations by the end of 2005. But when the end of 2005 rolled around, they had only 24 sites. IdleAire underwent rapid network expansion from the second quarter 2006 through the third quarter 2007, but late in 2007 apparently they ran out of steam - and money.
IdleAire had a net loss of $93.44 million in 2007 on revenues of $37.23 million, compared to a net loss of $60 million in 2006 on revenues of $13.98 million. So even though revenues were up 166 percent in 2007, the company lost about 50 percent more money than the year before.
In May 2008, after underwriting was withdrawn for a planned public stock offering and the company spent weeks intensely searching for funding, it filed voluntarily for Chapter 11 bankruptcy reorganization. In July 2008, the company was sold to a group of noteholders led by Wells Fargo Bank. But in the year and a half since, the company has not added any locations to its network.
OUT OF TIME AND MONEY
"Like many companies in the current economic situation, IdleAire experienced challenges," the company said. "Due to the economy, our customers had less freight to haul, resulting in reduced truck traffic and we have had extremely mild weather across the nation, reducing the demand for our climate control service. We continued to stay ahead of the financial issues and make adjustments as needed, but time and operating capital simply ran out."
As required by state and federal law, IdleAire notified its Knoxville employees last November that layoffs could occur. As a result of the closing, 315 employees will be laid off including 60 in the Knoxville area.
IdleAire had 131 locations in 34 states, providing filtered heating and air conditioning, electrical outlets, and a range of communications and entertainment options that allow long-haul truck drivers to shut down their engines instead of idling for cab comfort during daily rest periods and save fuel. Over 150,000 professional drivers and more than 1,000 fleets were actively using IdleAire services, according to the company.
For an analysis of IdleAire's problems, see "IdleAire Stalls Out" in the June 2008 issue of Heavy Duty Trucking.
[STORY UPDATED 8 a.m. central 1/29/09 to add TA response]
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